UniChem Convention 2007
Change is irreversible — embrace it
David Coles: “Leverage your strengths in order to meet your
challenges” |
If the tide is flowing your way, why not swim with it? So said David
Coles, director of business development at Alliance Healthcare and former
UniChem managing director, at UniChem’s annual convention, themed “Stronger
with us”, held in Barbados this week.
He was speaking about the
ongoing changes the pharmacy profession is undergoing, as well as changes
within the pharmaceutical wholesaling sector driven by manufacturers,
in his final address as managing director — Mr Coles is in the
process of handing over to Terry Scicluna.
“The big drivers for change are irreversible and are intensifying,” he
claimed. “As the Government struggles with increasing health costs
it is constantly seeking new, more efficient, models. Of course this
creates challenges, but the most important point in the big picture is
that pharmacy is not seen as part of the problem but as a major component
of the solution.”
He said that he was pleased to see that there is now real momentum for
change to support the direction of the community pharmacy contracts. “Consulting
rooms, medicines use reviews and wider health care provision are becoming
the norm, not the exception,” he told participants.
Mr Coles warned that “the NHS funding model is good at taking money
away but not at giving it back. Category M is biting harder, whereas
the offsetting funds for service provision are at best lagging or at
worst, where local funding is required, often non-existent.” Mr
Coles said that an obvious competition comes in the form of deregulation
on control of entry, with the 100-hour rule posing the greatest threat.
Mr Coles’ message for pharmacists is to “leverage your strengths
in order to meet your challenges” to respond to changes that are
happening. He said pharmacy is in a great position because: it is operating
in a growing, worthwhile, dynamic market; the profession is trusted and
respected by customers; and the Government acknowledges the key importance
of pharmacy’s role and is seeking to enhance it. He added that
if the profession draws attention to its strengths and embraces change, “you
will add credibility and power to your demands for fair funding and regulation”.
Reflecting on the UniChem business over the past year, Mr Coles pointed
out that UniChem was the first wholesaler to be awarded national Investors
in People accreditation for its internal commitment to staff development. “From
our drivers, our warehouse operators, our support staff and our managers,
we have sought to reinforce a customer service-oriented culture. Having
positive, motivated, skilled people is key to providing a good service
to customers,” he commented.
He went on to discuss the changes taking place in medicines distribution
over the past year: “UniChem’s approach, unlike that of our
competitors, has not been to ignore the changes, it’s not been
to criticise them, or to say we don’t need to change. First we
have sought to understand, then to engage.”
He continued: “Our competitors took a different approach. They
were aggressively negative and defensive to change — and this difference
in approach led to us leaving not only the UK industry association, but
also the European one.” He said that UniChem would continue to
seek to manage change in an “involving way” that is good
for pharmacy.
Contractors warned not to neglect contract services
Primary care trusts will never have spare money, but where community
pharmacy can step up to the plate there are great opportunities, Sue
Sharpe, Pharmaceutical Services Negotiating Committee chief executive,
told the convention.
Speaking on uptake of services under the community pharmacy contract
for England and Wales, Mrs Sharpe said that commissioning of local enhanced
services has developed but is still fragile and vulnerable to budget
pressures. “We wanted to build PCTs recognition of what pharmacy
could offer within the national contract framework. Many PCTs have done
this well; most are using the public health campaigns, many are targeting
medicines use reviews to specific patient types, and many have used the
multidisciplinary audit, though with reports of little enthusiasm from
GP colleagues,” she said.
“PCT finances have been through a bad couple of years,” she
pointed out, “but generally indications are that they are beginning
to be interested in commissioning local services from pharmacy.”
But Mrs Sharpe warned that the contract would change, and that pharmacists
would, almost inevitably, see greater freedom given to PCTs to commission
services in the future. “We will find it impossible to protect
nationally negotiated services if large numbers of contractors turn their
back on them.”
She said that too few pharmacies have made the shift from a dispensing-based
service to providing health care-based services. “About half the
pharmacies in England are still not providing advanced services,” she
pointed out. (See News
p249.)
Mrs Sharpe said that the PSNC would continue to work to protect nationally
set funding structures and that the Government has been quite explicit
that it intends to continue to set fees nationally. “But in the
longer term,” she said, “the policy of devolving budgets
and decision-making to local level will bring pressure to give PCTs increasing
control over how pharmacy funds are spent, with increasing freedom to
spend it elsewhere if pharmacy does not deliver the services and quality
they want.”
Chris Martin, non-executive director at UniChem and chairman of Pembrokeshire
Local Health Board, spoke about adoption of the contract in Wales. “The
contact monitoring undertaken by the LHBs has shown that pharmacy has
responded well to the new contract,” he said. Mr Martin said that
repeat dispensing had been slow to take off and was “patchy”.
He said that uptake of medicines use reviews was being led by pharmacy
multiples, but described the picture as “mixed” across the
country.
Community Pharmacy Wales has struggled to obtain fully funded national
contracts for enhanced services, he explained. “However, they have
negotiated national enhanced service indicative rates for pharmaceutical
rota, care home support services, minor ailment services, supervised
administration of medicines and needle exchange services.”
Threat posed by direct-to-patient market explored
From left, Mark Stephenson, Ornella Barra, Mike Isles and Sue Sharpe
talk supply |
Supply of medicines by pharmaceutical companies direct to patients is
a growing threat to pharmacy, Mike Smith, UniChem convention chairman
told participants.
He said that moves towards direct-to-patient supply have the potential
to remove the pharmacist and the wholesaler from the supply chain.
“Recent
changes have ensured that the pharmaceutical wholesaler remains in the
supply chain,” he said. “I remain resolutely opposed to the
introduction of third-party carriers to the system. More importantly
I believe that the pharmacist-patient relationship is sacrosanct. Safety,
counselling, compliance, review — we must never sacrifice that
relationship upon the altar of economy.”
Ornella Barra, Alliance Boots’s wholesale and commercial affairs
director, confirmed that, from experience in Europe, direct-to-patient
supply is a definite concern. She said that in the Netherlands over the
past six or seven months wholesalers have lost some 10 per cent of market
share to manufacturers delivering direct to patients using logistics
providers. Removing pharmacists from the supply chain was a danger. “The
community pharmacist can provide an essential element that the logistics
provider cannot — pharmaceutical care,” she emphasised.
Mark Stephenson, supplier relations director, UniChem, said that biotechnology
and specialist drugs were those most likely to bypass pharmacy.
“This for all of us — especially the patients themselves — is
extremely bad news. I would be lifting this issue very high up the agenda
of pharmacy challenges and demonstrating strongly the benefits of pharmacy,” he
suggested.
Sanofi-Aventis supply proposals discussed
The new distribution model to be implemented by Sanofi-Aventis on 1
November was explained by Mike Isles, Sanofi-Aventis’s supply chain
director (pictured above). He said that most of the drivers for change
had come from outside the pharmaceutical industry.
“As pharmacists you renegotiate your contract with the Department
of Health every few years. It’s the same for the pharmaceutical
industry. We renegotiate our agreement with the department every few
years too,” he
said. “At the end of negotiations in 1999, the department told
industry that their next priority was to review distribution. Particularly
they wanted to know what happens to the price, from factory gate to the
point of dispensing.”
He told participants that there is a new section in the current Pharmaceutical
Price Regulation Scheme on distribution, which says manufacturers must
be efficient in distribution in line with proper competitive commercial
practice. “The agreement also states that each manufacturer must
therefore consider distribution arrangements in line with their own specific
needs and this is why we started reviewing the situation.”
Mr Isles
explained that the wholesaler margin of 12.5 per cent was established
in the mid 1980s, which represented close to the real cost of distribution
at that time. It was the same typical cost of distribution that other
industries had in the UK, he added.
“But the cost of distribution
has fallen over the years. In the rest of UK industry, it has almost
halved. … I agree that it is not quite as simple as that as a
large percentage gets passed directly on to pharmacists. But we must
remember
that the 12.5 per cent is not related to the actual costs of distribution — it
is related to the price of the medicines being ordered,” he said.
Mr Isles said that three features now form part of the DoH’s basis
for future regulation of the pharmaceutical industry: efficient and competitive
supply; best practice in stock management; and the provision of data. “On
top of that,” Mr Isles said, “there is the growing problem
of what we call ‘integrity’ of the supply chain.” He
said that this includes stock management, out-of-stock situations and
the issue of counterfeit medicines.
On counterfeit medicines, Mr Isles said that “we must all work
together to be extra vigilant especially as intelligence indicates this
type of activity may be on the increase”.
Sanofi-Aventis has now decided to use only three wholesalers in the future
for the UK, he reiterated. “We have retained the wholesale model.
… Wholesalers will continue to control their discounts and there
will be no effect on the clawback mechanism.”
The company was also aware that retained purchase profit was part of
the new pharmacy contract, he said. However, he questioned how long the
clawback mechanism would remain: “We don’t know how long
this will last. The current clawback seems to be an increasing problem
for all of us. Actually, it is a bit of a ‘money-go-round’.
Industry has to give the discount to wholesalers, wholesalers have to
pass it on to pharmacists, and the Government claws it back from pharmacists.”
He said that Sanofi-Aventis chose a model that would not interfere with
discounts or clawback because of the current importance of these mechanisms
to the DoH and pharmacists.
Boots The Chemists to share ways of working
How UniChem’s new relationship with Boots following the Alliance
Boots merger can add value for UniChem’s independent pharmacy customers
was discussed.
Speaking of the merger, Graham Webster, regional stores director for
Boots The Chemists, said: “Suddenly there were new customers in
the group for us to think about, and new opportunities.”
Colin Stuart, director of commercial finance for Boots’ health
businesses, claimed that Boots does not directly target independent pharmacy. “Instead,” he
explained, “we target the grocers, large chain multiples and big
concentrations of business, such as health centres and care homes.”
“Having said that,” Mr Stuart admitted, “I know that
there are things about the way Boots does business that the independents
find
frustrating.” He cited the way the company runs its care homes
dispensing business as one such example.
Mr Webster described how UniChem’s recently launched “Your
counter assistant” range of training leaflets was drawn from Boots’ own “30
minute tutor” series. The programme consists of monthly briefings
on different conditions, which provide education on symptoms, causes
and treatments, as well as focused information about certain products.
He also revealed that Boots has stopped actively recruiting pharmacists
from among UniChem’s customers, “which places us at a disadvantage
against Lloyds, but is something that we are prepared to do for the good
of the wider Alliance Boots family”. |
The
Pharmaceutical Journal